When we think about a loan, we usually relate it to long-term requirements. But, there are no limitations to using a loan for fulfilling your short-term financing needs. The same can be achieved by considering options like a loan against shares or loan on mutual funds.
Both these options require you to submit assets as collateral. Hence, the loan against mutual funds interest rates that you receive is more feasible. On the other hand, the time required to generate cash from this option is also nominal.
Due to all these reasons, opting for a loan on mutual funds or shares is highly recommended for short-term needs. To know how a loan on the mutual fund can help you, here are five points that you must go through.
1. Consolidating other loans
There are a lot of people out there who require additional funds regularly. To fulfil this requirement, they may sometimes even opt for high-interest loans.
It becomes one of the primary reasons why they are not able to stabilize their financial situation. For anyone who is in a similar scenario, using a loan on a mutual fund is highly recommended.
With this low-interest rate financing option, you will be able to consolidate all your other credit lines. Besides, it can allow you to save a bit extra.
2. Paying credit card bills
Many of us are familiar with how a credit card works. Besides, this option has become a significant part of our life. It is especially when it comes to dealing with daily expenses.
But, what we usually forget is that credit cards have revolving interest rates. It means the percentage charged as a fee is significantly higher than other options. It is yet another reason why you should consider a loan on a mutual fund instead.
3. Working capital needs
If you are a business owner, then you know that there are numerous expenses, which come up every day. These expenses can be both long-term and short-term.
One situation, where a business owner needs instant finance, is to use it as working capital. For this, borrowers can now utilize services like a loan on a mutual fund.
The option is quick and is available against your current mutual fund portfolio. Overall, you will be able to generate as much money as you wish, depending on the value of your funds.
4. Medical bills
Even if it is not a medical emergency, there might be times when you visit a hospital. For simple health check-ups, people usually end-up spending a lot of money.
To ensure that you have some funds, some financing services like a loan on the mutual fund are available. The online application process of this financing service makes it very convenient for borrowers. Besides, it is ideal for short-term use due to the basic interest rates.
5. Travelling expenses
What do you do, when you want to take your family on vacation, but are lacking funds? It can be yet another example of a short-term requirement that can be dealt with a loan on a mutual fund.
The flexibility which is provided with mutual fund loans allows you to use the money for every requirement. In other words, a bank or financing institute will never guide you regarding how the funds can be utilized.
6. Educational Expenses
With the passage of time, educational expenses have only gotten more. This is poised to grow further in the further in the future. However, will that be a deterrent from quality education to your children? Certainly not.
With a loan against mutual funds, you can obtain the required funds on very short notice to ensure that there are no gaps in the path to your children’s better future.
There are a number of lenders including NBFCs (Non-Banking Financial Companies) available today with whom you can apply for a loan against mutual funds. The eligibility criteria are very simple and the documentation required is minimal.
One such reputed lender is Bajaj Finserv which apart from providing loans against mutual funds is also known to offer pre-approved offers on quick financing options. The aim of creating these pre-existing deals is to make the loan processing completely hassle-free and fast.
The interest rates are very competitive and the investment tenor can be chosen as per your preference. This goes a long way in ensuring that repayment of the loan does not become a burden in the future.